A step-by-step guide for moving from idea to starting a business and being a business owner
By Odun Longe
Many people who choose to start a business do so because they have identified a need that requires a solution or a gap that is an opportunity they can take advantage of.
Most times, these business owners begin to assess the viability of the business opportunity, a suitable business model and other legitimate business concerns. Very often, they push to the backburner, the regulatory framework required to provide a proper foundation in starting their business. This article is to serve as a guide to that brave entrepreneur who is willing to see her idea take shape, lay the proper framework and position her business for growth.
Upon identifying the kind of business you want to do as an entrepreneur, one of the most important things you need to do next is identify and set up an appropriate legal structure or entity for your business. To do this, you need to register your business with the Corporate Affairs Commission (CAC). The CAC is the relevant government agency that governs and regulates the registration and operation of business entities in Nigeria.
The legal structure for your business will depend on the nature of your business.
If you wish to run a one-person business or a partnership with less statutory obligations, you can register your business as a business name. Sometimes, the nature of your business will determine whether or not you choose to register as a business name. For instance, law firms must be set up as a business name, whilst a financial services business cannot be registered as a business name. Where you wish to have your business structured as a company with the members of your company having shares in the company, you can register your business as a limited liability company. If you want a legal structure that allows you to function as a social enterprise or an NGO (non-governmental organisation) and still conduct business (without distributing profit), you can register a company limited by guarantee or incorporated trustees. However, it is important to note that the proceeds and profits of a company limited by guarantee or incorporated trustees must only be applied to the purposes for which the company was formed and not to be distributed to the members of the company or trustees.
The good thing is, gone are the days when business registration took a protracted period or was a complex process as the CAC has now made business registration seamless and quick. The process is also online and can be done by anyone who has access to a mobile device.
The CAC’s operational restructuring is one of the reforms that has been implemented by the Presidential Enabling Business Environment Council (PEBEC), to ensure that the process of starting a business is more efficient and faster.
This reform has enabled business owners to register their businesses online. Checking whether a proposed business name is available can be done through the CAC portal. Name reservations and approvals (or denials where applicable) are done within 4 hours if the request is submitted before 2 pm on a business day or the next working day if after 2 pm. There are no more multiple forms to fill as the multiple forms required for company incorporation in times past have now been compressed into one single form – CAC 1.1; and upon completing the form and uploading it on the CAC portal, a business entity is registered within 2-3 days.
To alleviate the complexity that comes with going to the Federal Inland Revenue Service (FIRS) to stamp your CAC forms during the registration process or generate a TIN for your business, post business-registration (which is required for remitting taxes and a pre-condition to opening a bank account), through an integration with the FIRS e-payment solution, stamp duty is paid with documents stamped without walking into the FIRS office. Also, after you have completed your business registration process, your TIN is automatically generated and sent to your email address.
For tax purposes, every business must have a tax identification number (TIN) with which it will remit its taxes to the appropriate tax authorities. A TIN is also required to open a corporate bank account with a Nigerian bank.
In addition to these, the CAC has a responsive customer service desk to resolve complaints.
After registering your business with the CAC and obtaining your TIN, you need to take note of any sector-specific licence that you might require to legally run your business in Nigeria. For instance, if your business will involve manufacturing consumables, you will need to obtain a licence from the National Agency for Food and Drug Administration and Control (NAFDAC) and if you are going to offer financial services, you will need to obtain a licence from the Central Bank of Nigeria (CBN), if advertising, you need to be registered with the Advertising Practitioners of Nigeria (APCON), etc.
It is also important that you trademark the name and logo for your business with the Trademarks, Patents and Design Registry to protect these assets which will become more valuable as the business grows.
Conclusively, as the Chinese proverb says, the journey of a thousand miles begins with a single step. Your entrepreneurship journey can begin by taking a single step with this guide I have shared.
Editor’s Note: This article was originally published in The Spark Magazine. Find the magazine here to read other articles.